1. Shonda Goes To Netflix

Netflix struck back at Disney last week, plucking ABC’s #1 showrunner Shonda Rhimes, she of Scandal and Grey’s Anatomy fame. It was less about revenge however, than about making a move to a more mass audience.

Why It Matters

As our friend Seth Shapiro pointed out in his most excellent book TELEVISION: Innovation, Disruption and the World's Most Powerful Medium Volume 1, the original Golden Age of Television happened because most of the people buying TVs in the early days were the sort of affluent, educated consumers who appreciated more highbrow programming.

So too with Netflix, whose initial users were the sort of people for whom an extra $10/month on top of their already exorbitant cable bill was not a big deal. So it should not be surprising that Netflix’s first round of original programming was aimed at educated, affluent coastal types, who did indeed flock to series like House of Cards, Narcos, and Orange Is The New Black.

But now that Netflix seems to have more or less saturated that demographic, they need to move to a more mass audience. This isn’t something we’re guessing at, Netflix has been pretty upfront about it, and last year’s Full House revival, Fuller House was their first attempt at reaching a wider audience. While the series did well, attracting a large viewership, it wasn’t the sort of series that convinces people to subscribe to Netflix.

Enter Shonda Rhimes.

Netflix is betting that she can come up with another must-see franchise series, one that will indeed convince larger numbers of viewers to sign up. It’s part of Netflix’s plan to compete with ABC as well as HBO.

We say “as well as” because thanks to Netflix’s platform and recommendation-based interface, they can do both. They can continue to produce series like Black Mirror and BoJack Horseman and target that to one demographic, while recommending Rhimes’s new series and similar to a different audience. Which is not to say there won’t be plenty of crossover, but unlike a linear network, Netflix doesn’t need to worry about offending one demo to please another.

What You Need To Do About It

If you’re Hulu and Amazon, you probably want to take a page from Netflix’s playbook and start looking for some properties (and showrunners) with more mass appeal, with an eye towards attracting a broader audience.

If you’re a broadcast network, understand that Netflix is always going to be looking to poach your top talent and that it’s not that big a deal. There’s always that next generation of showrunners who'll only be too happy to get a contract with ABC, Fox, CBS or NBC, and that’s who’ll give you your next crop of hit shows. Just remember to be open to them.

Everyone else, just sit back and wait until we see what Rhimes has in store for Netflix.

 

2. Apple Gets Serious About TV. (Kind Of.)

As we pointed out over a year ago, Apple has sort of been knocked out of the TV game. This is a curious development, given the company’s massive ($250 billion) war chest, but they’ve done little since then to help their cause—if anything, their game has gone downhill, as recent reports from both Comscore and eMarketer show the high-priced Apple TV significantly trailing behind Roku, Chromecast and Amazon Fire TV.

Worse still, was their initial foray into original programming. An uninspired reality series called Planet of the Apps that never really found an audience.

That’s why it’s been heartening to see that Apple seems to finally be waking up. They recently hired a top notch team from Sony Pictures Television to oversee their TV efforts (points for choosing industry vets and not techies) and last week they announced that they were willing to spend up to $1 billion for ten new original series.

Why It Matters

It’s unclear how Apple plans to distribute these new programs. There appear to be three possible options: via iTunes, via Apple Music or via a new standalone service.

The iTunes option would mean each series would be sold separately (though Apple could technically bundle them together for a single price.) This would be easy for Apple but tough to promote and would amount to a one-time purchase for consumers. If Apple is going to invest $1B, they should at least expect to have recurring revenue.

The Apple Music play would be interesting. Like Apple TV, Apple Music is floundering. Big time floundering, especially with Millennials. (47% to 14%!!!)  Having high quality original TV shows on the platform would give people a reason to subscribe, though there’s no guarantee that they would then stick around to listen to music on it or drop their Spotify subscription in response.

There’s also the issue of “what else?”

Ten original series is not that many. Especially when you don’t have anything else to run along with it. That’s why we don’t see Apple launching a unique TV app with just ten new series, wonderful though they may be.

The problem Apple has here is that almost all network series have been bought up by Netflix, Amazon and Hulu, and there’s not much left in terms of quality niche short form either, Facebook and Google having more or less snatched all of that up earlier this year.

So while we’ll withhold further judgement until Apple announces just how they plan to distribute their new shows (which could likely turn out to be a surprise partnership or purchase of anyone from HBO to Hulu to Disney) distribution is something they are definitely going to need to figure out.

What You Need To Do About It

At this point, not much anyone can do, other than sit back and watch how it all plays out.

If you’re a network or MVPD with a strong distribution platform, remember to return Apple’s phone calls. With $250B in reserve, they might just be looking to make you an offer you can’t refuse.